Justin buys a motorcycle for $10,000. The dealer is charging him an annual interest rate of 9.25% and is using the add-on method to compute monthly payments. If he pays off the loan in 72 months, what are his monthly payments? If he makes a down payment of $2,900, how much will his monthly payments be? Do not round until the final answer. Then, round to the nearest cent.

A$432.78; $153.34
B $215.97; $279.14
C $215.97; $153.34
D $215.97; $307.27

Question

Justin buys a motorcycle for $10,000. The dealer is charging him an annual interest rate of 9.25% and is using the add-on method to compute monthly payments. If he pays off the loan in 72 months, what are his monthly payments? If he makes a down payment of $2,900, how much will his monthly payments be? Do not round until the final answer. Then, round to the nearest cent.

A$432.78; $153.34
B $215.97; $279.14
C $215.97; $153.34
D $215.97; $307.27

anonymous · Answer

P is the principal (the initial amount you borrow or deposit)

r is the annual rate of interest (percentage)

n is the number of years the amount is deposited or borrowed for.

A is the amount of money accumulated after n years, including interest.

When the interest is compounded once a year:

A = P(1 + r)^n

again

anonymous · Answer

A=P(1+(r/12))^72